Korea Won Rises to One-Month High on Current Account; Bonds Gain

April 29 (Bloomberg) -- The won rose to a one-month high on
speculation South Korea will attract more fund inflows as its
current-account surplus widens. Government bonds rose.

The currency advanced for a fourth day as the Bank of Korea
said in a statement today that the excess in the broadest
measure of trade increased to $4.98 billion in March from a
revised $2.71 billion in February. The won also climbed as the
dollar weakened against most of its major peers, including the
yen, after data on April 26 showed first-quarter gross domestic
product in the U.S. increased at a 2.5 percent annualized rate,
less than economists had forecast.

“A bigger current-account surplus signals there will be
more dollar inflows into the nation,” said Hong Seok Chan,
analyst at Daishin Economic Research Institute in Seoul.
“Globally, the dollar weakened after the U.S. GDP numbers,
prompting the yen to gain and the won to follow suit. Still,
concerns that authorities may try to stem the won’s gain and
possible North Korea threats may limit further rise.”

The won gained 0.4 percent to 1,107.30 per dollar in Seoul,
according to data compiled by Bloomberg. It earlier touched
1,106.65, highest since March 27. One-month implied volatility,
a measure of expected moves in the exchange rate used to price
options, rose six basis points, or 0.06 percentage point, to
7.32 percent.

South Korea’s April exports of automobile and other
products may rise 1 percent to 2 percent from a year earlier as
exporters’ competitiveness is undermined by a weak Japanese
currency, the finance ministry said in a statement yesterday.
The government estimates that a 10 percent gain in the won
versus the yen will result in South Korea’s exports dropping 1.9
percent from a year earlier in the following quarter.

Yen Weakness

The won has climbed 8.3 percent against the yen this year
and weakened 3.9 percent versus the dollar, data compiled by
Bloomberg show. The yen has declined more than 11 percent
against the greenback in the same period.

North Korea is still in the process of preparing Musudan
missile launch, Yonhap News reported, citing presidential office
spokesman Yoon Chang Jung, who was commenting on media reports
the North stopped missile launch preparation. The Korean
peninsula has been on edge since February, when Kim Jong Un’s
regime detonated an atomic bomb in defiance of United Nations
sanctions and then threatened preemptive nuclear strikes against
its enemies.

The yield on the 2.75 percent government bonds due March
2018 fell one basis point to 2.57 percent, according to prices
from Korea Exchange Inc.